93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB4109

 

Introduced 1/15/2004, by Lou Lang

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/7-137   from Ch. 108 1/2, par. 7-137
40 ILCS 5/7-139   from Ch. 108 1/2, par. 7-139

    Amends the Illinois Municipal Article of the Illinois Pension Code. Provides that a person who is employed by a municipality that (i) has at least 35 employees on its effective date of participation, (ii) is located within a county with at least 2,000,000 inhabitants; and (iii) maintains an independent defined benefit pension plan for the benefit of its employees shall not be considered a participating employee under the Fund, unless he or she files an irrevocable election to participate within 90 days after the municipality's effective date of participation. Provides that a municipality that (i) has at least 35 employees on its effective date of participation, (ii) is located within a county with at least 2,000,000 inhabitants; and (iii) maintains an independent defined benefit pension plan for the benefit of its employees may restrict creditable service for an employee's periods of prior service if the municipality adopts an irrevocable resolution and files that resolution with the board. Effective immediately.


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FISCAL NOTE ACT MAY APPLY
PENSION IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1     AN ACT concerning public employee benefits.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Pension Code is amended by changing
5 Sections 7-137 and 7-139 as follows:
 
6     (40 ILCS 5/7-137)  (from Ch. 108 1/2, par. 7-137)
7     Sec. 7-137. Participating and covered employees.
8     (a) The persons described in this paragraph (a) shall be
9 included within and be subject to this Article and eligible to
10 benefits from this fund, beginning upon the dates hereinafter
11 specified:
12         1. Except as to the employees specifically excluded
13     under the provisions of this Article, all persons who are
14     employees of any municipality (or instrumentality thereof)
15     or participating instrumentality on the effective date of
16     participation of the municipality or participating
17     instrumentality beginning upon such effective date.
18         2. Except as to the employees specifically excluded
19     under the provisions of this Article, all persons, who
20     became employees of any participating municipality (or
21     instrumentality thereof) or participating instrumentality
22     after the effective date of participation of such
23     municipality or participating instrumentality, beginning
24     upon the date such person becomes an employee.
25         3. All persons who file notice with the board as
26     provided in paragraph (b) 2 and 3 of this Section,
27     beginning upon the date of filing such notice.
28     (b) The following described persons shall not be considered
29 participating employees eligible for benefits from this fund,
30 but shall be included within and be subject to this Article
31 (each of the descriptions is not exclusive but is cumulative):
32         1. Any person who occupies an office or is employed in

 

 

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1     a position normally requiring performance of duty during
2     less than 600 hours a year for a municipality (including
3     all instrumentalities thereof) or a participating
4     instrumentality. If a school treasurer performs services
5     for more than one school district, the total number of
6     hours of service normally required for the several school
7     districts shall be considered to determine whether he
8     qualifies under this paragraph;
9         2. Any person who holds elective office unless he has
10     elected while in that office in a written notice on file
11     with the board to become a participating employee;
12         3. Any person working for a city hospital unless any
13     such person, while in active employment, has elected in a
14     written notice on file with the board to become a
15     participating employee and notification thereof is
16     received by the board;
17         4. Any person who becomes an employee after June 30,
18     1979 as a public service employment program participant
19     under the federal Comprehensive Employment and Training
20     Act and whose wages or fringe benefits are paid in whole or
21     in part by funds provided under such Act; .
22         5. Any person who is actively employed by a
23     municipality that (i) has at least 35 employees on its
24     effective date of participation; (ii) is located in a
25     county with at least 2,000,000 inhabitants; and (iii)
26     maintains an independent defined benefit pension plan for
27     the benefit of its eligible employees, unless the person
28     files with the board within 90 days after the
29     municipality's effective date of participation an
30     irrevocable election to participate.
31     (c) Any person electing to be a participating employee,
32 pursuant to paragraph (b) of this Section may not change such
33 election, except as provided in Section 7-137.1.
34     (d) Any employee who occupied the position of school nurse
35 in any participating municipality on August 8, 1961 and
36 continuously thereafter until the effective date of the

 

 

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1 exercise of the option authorized by this subparagraph, who on
2 August 7, 1961 was a member of the Teachers' Retirement System
3 of Illinois, by virtue of certification by the Department of
4 Registration and Education as a public health nurse, may elect
5 to terminate participation in this Fund in order to
6 re-establish membership in such System. The election may be
7 exercised by filing written notice thereof with the Board or
8 with the Board of Trustees of said Teachers' Retirement System,
9 not later than September 30, 1963, and shall be effective on
10 the first day of the calendar month next following the month in
11 which the notice was filed. If the written notice is filed with
12 such Teachers' Retirement System, that System shall
13 immediately notify this Fund, but neither failure nor delay in
14 notification shall affect the validity of the employee's
15 election. If the option is exercised, the Fund shall notify
16 such Teachers' Retirement System of such fact and transfer to
17 that system the amounts contributed by the employee to this
18 Fund, including interest at 3% per annum, but excluding
19 contributions applicable to social security coverage during
20 the period beginning August 8, 1961 to the effective date of
21 the employee's election. Participation in this Fund as to any
22 credits on or after August 8, 1961 and up to the effective date
23 of the employee's election shall terminate on such effective
24 date.
25     (e) Any participating municipality or participating
26 instrumentality, other than a school district or special
27 education joint agreement created under Section 10-22.31 of the
28 School Code, may, by a resolution or ordinance duly adopted by
29 its governing body, elect to exclude from participation and
30 eligibility for benefits all persons who are employed after the
31 effective date of such resolution or ordinance and who occupy
32 an office or are employed in a position normally requiring
33 performance of duty for less than 1000 hours per year for the
34 participating municipality (including all instrumentalities
35 thereof) or participating instrumentality except for persons
36 employed in a position normally requiring performance of duty

 

 

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1 for 600 hours or more per year (i) by such participating
2 municipality or participating instrumentality prior to the
3 effective date of the resolution or ordinance, (ii) by any
4 participating municipality or participating instrumentality
5 prior to January 1, 1982 and (iii) by a participating
6 municipality or participating instrumentality, which had not
7 adopted such a resolution when the person was employed, and the
8 function served by the employee's position is assumed by
9 another participating municipality or participating
10 instrumentality. A participating municipality or participating
11 instrumentality included in and subject to this Article after
12 January 1, 1982 may adopt such resolution or ordinance only
13 prior to the date it becomes included in and subject to this
14 Article. Notwithstanding the foregoing, a participating
15 municipality or participating instrumentality which is formed
16 solely to succeed to the functions of a participating
17 municipality or participating instrumentality shall be
18 considered to have adopted any such resolution or ordinance
19 which may have been applicable to the employees performing such
20 functions. The election made by the resolution or ordinance
21 shall take effect at the time specified in the resolution or
22 ordinance, and once effective shall be irrevocable.
23 (Source: P.A. 86-272; 87-740; 87-850.)
 
24     (40 ILCS 5/7-139)  (from Ch. 108 1/2, par. 7-139)
25     Sec. 7-139. Credits and creditable service to employees.
26     (a) Each participating employee shall be granted credits
27 and creditable service, for purposes of determining the amount
28 of any annuity or benefit to which he or a beneficiary is
29 entitled, as follows:
30         1. For prior service: Each participating employee who
31     is an employee of a participating municipality or
32     participating instrumentality on the effective date shall
33     be granted creditable service, but no credits under
34     paragraph 2 of this subsection (a), for periods of prior
35     service for which credit has not been received under any

 

 

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1     other pension fund or retirement system established under
2     this Code, as follows:
3         If the effective date of participation for the
4     participating municipality or participating
5     instrumentality is on or before January 1, 1998, creditable
6     service shall be granted for the entire period of prior
7     service with that employer without any employee
8     contribution.
9         If the effective date of participation for the
10     participating municipality or participating
11     instrumentality is after January 1, 1998, creditable
12     service shall be granted for the last 20% of the period of
13     prior service with that employer, but no more than 5 years,
14     without any employee contribution. A participating
15     employee may establish creditable service for the
16     remainder of the period of prior service with that employer
17     by making an application in writing, accompanied by payment
18     of an employee contribution in an amount determined by the
19     Fund, based on the employee contribution rates in effect at
20     the time of application for the creditable service and the
21     employee's salary rate on the effective date of
22     participation for that employer, plus interest at the
23     effective rate from the date of the prior service to the
24     date of payment. Application for this creditable service
25     may be made at any time while the employee is still in
26     service.
27         A municipality that (i) has at least 35 employees; (ii)
28     is located in a county with at least 2,000,000 inhabitants;
29     and (iii) maintains an independent defined benefit pension
30     plan for the benefit of its eligible employees may restrict
31     creditable service in whole or in part for periods of prior
32     service with the employer if the governing body of the
33     municipality adopts an irrevocable resolution to restrict
34     that creditable service and files the resolution with the
35     board before the municipality's effective date of
36     participation.

 

 

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1         Any person who has withdrawn from the service of a
2     participating municipality or participating
3     instrumentality prior to the effective date, who reenters
4     the service of the same municipality or participating
5     instrumentality after the effective date and becomes a
6     participating employee is entitled to creditable service
7     for prior service as otherwise provided in this subdivision
8     (a)(1) only if he or she renders 2 years of service as a
9     participating employee after the effective date.
10     Application for such service must be made while in a
11     participating status. The salary rate to be used in the
12     calculation of the required employee contribution, if any,
13     shall be the employee's salary rate at the time of first
14     reentering service with the employer after the employer's
15     effective date of participation.
16         2. For current service, each participating employee
17     shall be credited with:
18             a. Additional credits of amounts equal to each
19         payment of additional contributions received from him
20         under Section 7-173, as of the date the corresponding
21         payment of earnings is payable to him.
22             b. Normal credits of amounts equal to each payment
23         of normal contributions received from him, as of the
24         date the corresponding payment of earnings is payable
25         to him, and normal contributions made for the purpose
26         of establishing out-of-state service credits as
27         permitted under the conditions set forth in paragraph 6
28         of this subsection (a).
29             c. Municipality credits in an amount equal to 1.4
30         times the normal credits, except those established by
31         out-of-state service credits, as of the date of
32         computation of any benefit if these credits would
33         increase the benefit.
34             d. Survivor credits equal to each payment of
35         survivor contributions received from the participating
36         employee as of the date the corresponding payment of

 

 

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1         earnings is payable, and survivor contributions made
2         for the purpose of establishing out-of-state service
3         credits.
4         3. For periods of temporary and total and permanent
5     disability benefits, each employee receiving disability
6     benefits shall be granted creditable service for the period
7     during which disability benefits are payable. Normal and
8     survivor credits, based upon the rate of earnings applied
9     for disability benefits, shall also be granted if such
10     credits would result in a higher benefit to any such
11     employee or his beneficiary.
12         4. For authorized leave of absence without pay: A
13     participating employee shall be granted credits and
14     creditable service for periods of authorized leave of
15     absence without pay under the following conditions:
16             a. An application for credits and creditable
17         service is submitted to the board while the employee is
18         in a status of active employment, and within 2 years
19         after termination of the leave of absence period for
20         which credits and creditable service are sought.
21             b. Not more than 12 complete months of creditable
22         service for authorized leave of absence without pay
23         shall be counted for purposes of determining any
24         benefits payable under this Article.
25             c. Credits and creditable service shall be granted
26         for leave of absence only if such leave is approved by
27         the governing body of the municipality, including
28         approval of the estimated cost thereof to the
29         municipality as determined by the fund, and employee
30         contributions, plus interest at the effective rate
31         applicable for each year from the end of the period of
32         leave to date of payment, have been paid to the fund in
33         accordance with Section 7-173. The contributions shall
34         be computed upon the assumption earnings continued
35         during the period of leave at the rate in effect when
36         the leave began.

 

 

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1             d. Benefits under the provisions of Sections
2         7-141, 7-146, 7-150 and 7-163 shall become payable to
3         employees on authorized leave of absence, or their
4         designated beneficiary, only if such leave of absence
5         is creditable hereunder, and if the employee has at
6         least one year of creditable service other than the
7         service granted for leave of absence. Any employee
8         contributions due may be deducted from any benefits
9         payable.
10             e. No credits or creditable service shall be
11         allowed for leave of absence without pay during any
12         period of prior service.
13         5. For military service: The governing body of a
14     municipality or participating instrumentality may elect to
15     allow creditable service to participating employees who
16     leave their employment to serve in the armed forces of the
17     United States for all periods of such service, provided
18     that the person returns to active employment within 90 days
19     after completion of full time active duty, but no
20     creditable service shall be allowed such person for any
21     period that can be used in the computation of a pension or
22     any other pay or benefit, other than pay for active duty,
23     for service in any branch of the armed forces of the United
24     States. If necessary to the computation of any benefit, the
25     board shall establish municipality credits for
26     participating employees under this paragraph on the
27     assumption that the employee received earnings at the rate
28     received at the time he left the employment to enter the
29     armed forces. A participating employee in the armed forces
30     shall not be considered an employee during such period of
31     service and no additional death and no disability benefits
32     are payable for death or disability during such period.
33         Any participating employee who left his employment
34     with a municipality or participating instrumentality to
35     serve in the armed forces of the United States and who
36     again became a participating employee within 90 days after

 

 

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1     completion of full time active duty by entering the service
2     of a different municipality or participating
3     instrumentality, which has elected to allow creditable
4     service for periods of military service under the preceding
5     paragraph, shall also be allowed creditable service for his
6     period of military service on the same terms that would
7     apply if he had been employed, before entering military
8     service, by the municipality or instrumentality which
9     employed him after he left the military service and the
10     employer costs arising in relation to such grant of
11     creditable service shall be charged to and paid by that
12     municipality or instrumentality.
13         Notwithstanding the foregoing, any participating
14     employee shall be entitled to creditable service as
15     required by any federal law relating to re-employment
16     rights of persons who served in the United States Armed
17     Services. Such creditable service shall be granted upon
18     payment by the member of an amount equal to the employee
19     contributions which would have been required had the
20     employee continued in service at the same rate of earnings
21     during the military leave period, plus interest at the
22     effective rate.
23         5.1. In addition to any creditable service established
24     under paragraph 5 of this subsection (a), creditable
25     service may be granted for up to 24 months of service in
26     the armed forces of the United States.
27         In order to receive creditable service for military
28     service under this paragraph 5.1, a participating employee
29     must (1) apply to the Fund in writing and provide evidence
30     of the military service that is satisfactory to the Board;
31     (2) obtain the written approval of the current employer;
32     and (3) make contributions to the Fund equal to (i) the
33     employee contributions that would have been required had
34     the service been rendered as a member, plus (ii) an amount
35     determined by the board to be equal to the employer's
36     normal cost of the benefits accrued for that military

 

 

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1     service, plus (iii) interest on items (i) and (ii) from the
2     date of first membership in the Fund to the date of
3     payment. If payment is made during the 6-month period that
4     begins 3 months after the effective date of this amendatory
5     Act of 1997, the required interest shall be at the rate of
6     2.5% per year, compounded annually; otherwise, the
7     required interest shall be calculated at the regular
8     interest rate.
9         6. For out-of-state service: Creditable service shall
10     be granted for service rendered to an out-of-state local
11     governmental body under the following conditions: The
12     employee had participated and has irrevocably forfeited
13     all rights to benefits in the out-of-state public employees
14     pension system; the governing body of his participating
15     municipality or instrumentality authorizes the employee to
16     establish such service; the employee has 2 years current
17     service with this municipality or participating
18     instrumentality; the employee makes a payment of
19     contributions, which shall be computed at 8% (normal) plus
20     2% (survivor) times length of service purchased times the
21     average rate of earnings for the first 2 years of service
22     with the municipality or participating instrumentality
23     whose governing body authorizes the service established
24     plus interest at the effective rate on the date such
25     credits are established, payable from the date the employee
26     completes the required 2 years of current service to date
27     of payment. In no case shall more than 120 months of
28     creditable service be granted under this provision.
29         7. For retroactive service: Any employee who could have
30     but did not elect to become a participating employee, or
31     who should have been a participant in the Municipal Public
32     Utilities Annuity and Benefit Fund before that fund was
33     superseded, may receive creditable service for the period
34     of service not to exceed 50 months; however, a current or
35     former elected or appointed official of a participating
36     municipality may establish credit under this paragraph 7

 

 

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1     for more than 50 months of service as an official of that
2     municipality, if the excess over 50 months is approved by
3     resolution of the governing body of the affected
4     municipality filed with the Fund before January 1, 2002.
5         Any employee who is a participating employee on or
6     after September 24, 1981 and who was excluded from
7     participation by the age restrictions removed by Public Act
8     82-596 may receive creditable service for the period, on or
9     after January 1, 1979, excluded by the age restriction and,
10     in addition, if the governing body of the participating
11     municipality or participating instrumentality elects to
12     allow creditable service for all employees excluded by the
13     age restriction prior to January 1, 1979, for service
14     during the period prior to that date excluded by the age
15     restriction. Any employee who was excluded from
16     participation by the age restriction removed by Public Act
17     82-596 and who is not a participating employee on or after
18     September 24, 1981 may receive creditable service for
19     service after January 1, 1979. Creditable service under
20     this paragraph shall be granted upon payment of the
21     employee contributions which would have been required had
22     he participated, with interest at the effective rate for
23     each year from the end of the period of service established
24     to date of payment.
25         8. For accumulated unused sick leave: A participating
26     employee who is applying for a retirement annuity shall be
27     entitled to creditable service for that portion of the
28     employee's accumulated unused sick leave for which payment
29     is not received, as follows:
30             a. Sick leave days shall be limited to those
31         accumulated under a sick leave plan established by a
32         participating municipality or participating
33         instrumentality which is available to all employees or
34         a class of employees.
35             b. Only sick leave days accumulated with a
36         participating municipality or participating

 

 

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1         instrumentality with which the employee was in service
2         within 60 days of the effective date of his retirement
3         annuity shall be credited; If the employee was in
4         service with more than one employer during this period
5         only the sick leave days with the employer with which
6         the employee has the greatest number of unpaid sick
7         leave days shall be considered.
8             c. The creditable service granted shall be
9         considered solely for the purpose of computing the
10         amount of the retirement annuity and shall not be used
11         to establish any minimum service period required by any
12         provision of the Illinois Pension Code, the effective
13         date of the retirement annuity, or the final rate of
14         earnings.
15             d. The creditable service shall be at the rate of
16         1/20 of a month for each full sick day, provided that
17         no more than 12 months may be credited under this
18         subdivision 8.
19             e. Employee contributions shall not be required
20         for creditable service under this subdivision 8.
21             f. Each participating municipality and
22         participating instrumentality with which an employee
23         has service within 60 days of the effective date of his
24         retirement annuity shall certify to the board the
25         number of accumulated unpaid sick leave days credited
26         to the employee at the time of termination of service.
27         9. For service transferred from another system:
28     Credits and creditable service shall be granted for service
29     under Article 3, 4, 5, 14 or 16 of this Act, to any active
30     member of this Fund, and to any inactive member who has
31     been a county sheriff, upon transfer of such credits
32     pursuant to Section 3-110.3, 4-108.3, 5-235, 14-105.6 or
33     16-131.4, and payment by the member of the amount by which
34     (1) the employer and employee contributions that would have
35     been required if he had participated in this Fund as a
36     sheriff's law enforcement employee during the period for

 

 

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1     which credit is being transferred, plus interest thereon at
2     the effective rate for each year, compounded annually, from
3     the date of termination of the service for which credit is
4     being transferred to the date of payment, exceeds (2) the
5     amount actually transferred to the Fund. Such transferred
6     service shall be deemed to be service as a sheriff's law
7     enforcement employee for the purposes of Section 7-142.1.
8     (b) Creditable service - amount:
9         1. One month of creditable service shall be allowed for
10     each month for which a participating employee made
11     contributions as required under Section 7-173, or for which
12     creditable service is otherwise granted hereunder. Not
13     more than 1 month of service shall be credited and counted
14     for 1 calendar month, and not more than 1 year of service
15     shall be credited and counted for any calendar year. A
16     calendar month means a nominal month beginning on the first
17     day thereof, and a calendar year means a year beginning
18     January 1 and ending December 31.
19         2. A seasonal employee shall be given 12 months of
20     creditable service if he renders the number of months of
21     service normally required by the position in a 12-month
22     period and he remains in service for the entire 12-month
23     period. Otherwise a fractional year of service in the
24     number of months of service rendered shall be credited.
25         3. An intermittent employee shall be given creditable
26     service for only those months in which a contribution is
27     made under Section 7-173.
28     (c) No application for correction of credits or creditable
29 service shall be considered unless the board receives an
30 application for correction while (1) the applicant is a
31 participating employee and in active employment with a
32 participating municipality or instrumentality, or (2) while
33 the applicant is actively participating in a pension fund or
34 retirement system which is a participating system under the
35 Retirement Systems Reciprocal Act. A participating employee or
36 other applicant shall not be entitled to credits or creditable

 

 

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1 service unless the required employee contributions are made in
2 a lump sum or in installments made in accordance with board
3 rule.
4     (d) Upon the granting of a retirement, surviving spouse or
5 child annuity, a death benefit or a separation benefit, on
6 account of any employee, all individual accumulated credits
7 shall thereupon terminate. Upon the withdrawal of additional
8 contributions, the credits applicable thereto shall thereupon
9 terminate. Terminated credits shall not be applied to increase
10 the benefits any remaining employee would otherwise receive
11 under this Article.
12 (Source: P.A. 91-887, eff. 7-6-00; 92-424, eff. 8-17-01.)
 
13     Section 99. Effective date. This Act takes effect upon
14 becoming law.